By Jeffrey May, J.D.
Foreign companies facing price fixing claims brought by the State of Washington in Washington state court have failed to convince the U.S. Supreme Court to take up their challenge to the state court’s jurisdiction. Today, the Court denied their petition for writ of certiorari and let stand a July 2016 decision of the Washington state supreme court that the state adequately alleged that the foreign companies had sufficient minimum contacts with the state to satisfy both the long arm statute and the Due Process clause. The petitioners were asking the court to provide a uniform, nationwide standard for personal jurisdiction in light of a split over which "stream of commerce" test for personal jurisdiction is constitutionally mandated (Koninklijke Philips Electronics N.V. v. State of Washington, Dkt. 16-559).
The state brought the action against the companies for conspiring to fix prices in the market for cathode ray tubes (CRTs) used in televisions and computer monitors. The petitioners identified themselves as "foreign component-part manufacturers who sold their wares to foreign finished product manufacturers, who in turn ultimately transmitted those finished products directly or indirectly to Washington." They argued that the state sought to establish personal jurisdiction using a "pure stream-of-commerce" theory, with jurisdiction based on the foreseeable acts of third parties who incorporated CRTs into finished products sold in Washington. The petitioners contended that the test for jurisdiction should require something more than knowledge that third parties would incorporate the component parts and sell the finished products in the forum.
Question presented. The petitioners asked whether the Due Process Clause permitted the state court’s exercise of specific personal jurisdiction over non-resident defendants based solely on the act of placing component parts into the stream of commerce by selling them to third parties who made finished products that foreseeably might come to the forum state.
FTC enforcement. In other Supreme Court news today, two petitions challenging federal appellate court decisions in FTC enforcement actions were rejected.
The founder of the social networking website Jerk.com was denied Supreme Court review of a decision of the U.S. Court of Appeals in Boston, which affirmed the FTC’s determination that the founder was personally liable for the website’s material misrepresentations as to the source of the website’s content and the benefits of a paid membership. In his petition for review, the founder contended that the Commission abused its regulatory power and suppressed First Amendment rights under the pretext of exercising deception jurisdiction pursuant to Section 5(a) of the FTC Act. In addition, he argued that the FTC’s policing of "misleading" commercial speech conflicts with protecting content-based commercial speech as mandated by the Supreme Court (Fanning v. FTC, Dkt. 16-397).
Separately, the Court let stand a Ninth Circuit decision in an FTC action against a former online auction website marketing company over its deceptive and unfair practices of automatically enrolling consumers in its membership plan. The appellate court decided that the district court did not err in holding the firm’s president personally liable for the company’s unlawful practices and ordering him to pay restitution. The petitioner, Charles Gugliuzza, and his company, Commerce Planet, Inc., operated the "OnlineSupplier" website, which marketed a free "Online Auction Starter Kit" on how to turn a profit from buying and selling on auction websites. In his petition, Gugliuzza questioned whether the Ninth Circuit erred in upholding a decision affirming judgment under Section 13(b) of the FTC Act based on the amount of the judgment, the imposition of joint and several liability, and the denial of a jury trial (Gugliuzza v. FTC, Dkt. 16-345).
Attorneys: Aaron M. Streett (Baker Botts, L.L.P.) for Koninklijke Philips N.V. Peter Benjamin Gonick for State of Washington. Peter F. Carr, II (Eckert Seamans Cherin & Mellott, LLC) for John Fanning. Ian Heath Gershengorn, Acting Solicitor General, for FTC. Erwin Chemerinsky for Charles Gugliuzza. Ian Heath Gershengorn, Acting Solicitor General, for FTC.
Companies: Koninklijke Philips N.V.; Jerk, LLC; Commerce Plant, Inc.
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